What is FINRA arbitration?

FINRA arbitration is a method of resolving disputes between investors and brokerage firms or financial advisors outside the court system. It involves a neutral third party, an arbitrator, who reviews the case and makes a binding decision.

Why choose arbitration over litigation?

Arbitration is typically faster, less formal, and more cost-effective than litigation. It also provides a final resolution to disputes, with limited grounds for appeal. Most relationships with financial advisors are formalized by entering into a contract which contains a dispute resolution clause. Nationally, most dispute resolution clauses provide for FINRA arbitration.

Who can file a FINRA arbitration claim?

Investors, brokerage firms, and financial advisors can file a FINRA arbitration claim if they have a dispute related to securities or investment activities. FINRA arbitration is normally the forum for disputes among registered persons, brokerage firms and the public customer clients of the firms.

How do I start the FINRA arbitration process?

To start the arbitration process, Bakhtiari & Harrison will file a Statement of Claim with FINRA, detailing the nature of the dispute, the parties involved, and the relief sought.

What is a Statement of Claim?

A Statement of Claim is a written document submitted by the claimant outlining the facts of the dispute, legal claims, and the desired outcome.

What happens after filing the Statement of Claim?

After filing, the respondent has 45 days to answer the Statement of Claim. The answer must address the claims and may include counterclaims or other relief sought.

What fees are involved in FINRA arbitration?

Fees include filing fees, hearing session fees, and possibly member surcharges or process fees, depending on the specifics of the case.

Can I represent myself in FINRA arbitration?

Yes, you can represent yourself, but many choose to hire an attorney with experience in securities arbitration due to the complexity of the process. Investors and industry professionals who choose to represent themselves do so at a substantial disadvantage, Wall Street firms typically retain experienced professional counsel to represent their interests.

How are arbitrators selected?

Arbitrators are selected through the Neutral List Selection System (NLSS), which provides a list of potential arbitrators. Both parties rank and strike names to agree on a panel.

What qualifications do FINRA arbitrators have?

FINRA arbitrators include attorneys, accountants, financial professionals, and public members who have undergone training and meet FINRA’s qualification standards.

How long does the arbitration process take?

The process typically takes 12-18 months from filing to the final award, but this can vary based on case complexity and scheduling. Preference may be given to investors that are seriously ill or elderly.

What is a prehearing conference?

A prehearing conference is a meeting between the parties and the arbitrators to discuss procedural issues, set a schedule, and address preliminary matters including final FINRA arbitration hearing dates.

What is discovery in arbitration?

Discovery is the exchange of documents and information between the parties to prepare for the hearing. It is more limited than in litigation.

What happens during the arbitration hearing?

During the hearing, both sides present evidence, call witnesses, and make arguments. The arbitrators then deliberate and render a decision.

Is the arbitration hearing open to the public?

No, arbitration hearings are private and confidential. Only the parties, their representatives, and the arbitrators may attend.

Can I settle my case before the hearing?

Yes, parties can settle at any time before the arbitrators render a decision, often through negotiation or mediation.

What is mediation in the context of FINRA arbitration?

Mediation is a voluntary process where a neutral mediator helps the parties negotiate a settlement. It is separate from arbitration and non-binding.

What happens if I lose in arbitration?

If you lose, the arbitrator’s decision is final and binding. There are limited grounds for challenging the award in court.

Can I appeal an arbitration decision?

Generally, you cannot appeal an arbitration decision. However, you can seek to vacate the award on very narrow grounds, such as arbitrator misconduct.

What types of disputes are resolved through FINRA arbitration?

Disputes include claims of fraud, breach of fiduciary duty, negligence, breach of contract, and other issues related to securities and investments.

How are damages determined in arbitration?

Damages are determined based on the evidence presented, including financial records, expert testimony, and the specifics of the case.

Can arbitrators award attorney’s fees?

Arbitrators can award attorney’s fees if provided for by law, contract, or if both parties request it.

How do I enforce an arbitration award?

An arbitration award can be enforced in court through a confirmation process, making it a judgment that can be collected.

What is expungement in FINRA arbitration?

Expungement is the process of removing information from a broker’s record on the Central Registration Depository (CRD) system. It is only granted under specific conditions.

What are the grounds for vacating an arbitration award?

Grounds for vacating an award include arbitrator bias, fraud, corruption, or misconduct, as well as exceeding their powers.

Are arbitration awards public?

Yes, arbitration awards are published on FINRA’s website, providing transparency and access to past decisions.

What is the role of the Office of Dispute Resolution?

The Office of Dispute Resolution administers arbitration and mediation cases, ensuring that the process runs smoothly and efficiently.

What is a Simplified Arbitration?

Simplified Arbitration is for cases involving claims of $50,000 or less, allowing for a quicker and less expensive resolution without a hearing.

Can I request an expedited hearing?

Yes, in certain circumstances, such as elderly or seriously ill parties, you can request an expedited hearing.

What is the role of an arbitrator?

An arbitrator acts as a neutral decision-maker, reviewing evidence, hearing testimony, and issuing a binding decision on the dispute.

How do I prepare for an arbitration hearing?

Preparation involves gathering evidence, preparing witnesses, and developing a clear case strategy to present to the arbitrators.

What types of evidence are admissible in arbitration?

Evidence can include documents, emails, financial records, expert reports, and witness testimony, subject to the arbitrators’ discretion.

Can I request documents from the other party?

Yes, through the discovery process, you can request relevant documents and information from the other party to support your case.

How does FINRA handle conflicts of interest with arbitrators?

FINRA requires arbitrators to disclose any potential conflicts of interest, and parties can object to arbitrators they believe are biased.

What happens if a party does not comply with discovery?

If a party does not comply, the other party can file a motion to compel, asking the arbitrators to order compliance and possibly impose sanctions.

What is a motion in arbitration?

A motion is a formal request for the arbitrators to make a ruling on a specific issue, such as compelling discovery or dismissing a claim.

Can I request interim relief in arbitration?

Yes, you can request interim relief, such as temporary restraining orders or injunctions, to preserve the status quo pending the final decision.

How are hearing locations determined?

Hearing locations are typically determined by the location of the claimant unless both parties agree to a different venue.

What is a telephonic or virtual hearing?

Telephonic or virtual hearings are conducted via phone or video conference, allowing parties to participate remotely.

How are arbitration awards paid?

Awards are typically paid by the losing party within 30 days of the decision, unless otherwise specified by the arbitrators.

What if the losing party does not pay the award?

If the losing party does not pay, you can seek enforcement through the courts, turning the award into a legally enforceable judgment.

Are there any limits on the types of claims I can bring in arbitration?

FINRA arbitration covers a broad range of claims related to securities, but there are some statutory and regulatory limits on certain types of claims.

Can I bring a class action in FINRA arbitration?

No, class actions are not permitted in FINRA arbitration. However, you can join other claimants in a single arbitration if the claims are similar.

What is the role of expert witnesses in arbitration?

Expert witnesses can provide specialized knowledge and opinions to help explain complex financial issues to the arbitrators.

How are hearing dates scheduled?

Hearing dates are scheduled based on availability of the parties and arbitrators, with consideration for the complexity of the case.

Can I request a different arbitrator if I believe one is biased?

Yes, you can challenge an arbitrator if you believe they have a conflict of interest or bias that affects their impartiality.

What is a “chairperson” in a FINRA arbitration panel?

The chairperson is the lead arbitrator who manages the procedural aspects of the case and ensures the hearing runs smoothly.

How does FINRA ensure fairness in arbitration?

FINRA has rules and procedures in place to ensure a fair and impartial process, including arbitrator training and disclosure requirements.

How do I learn more about the FINRA arbitration process?

For more information, you can visit FINRA’s website, contact their Office of Dispute Resolution, or consult with experienced attorneys like those at Bakhtiari & Harrison.

How can Bakhtiari & Harrison help with FINRA arbitration?

Bakhtiari & Harrison can assist with filing claims, responding, selecting arbitrators, discovery, hearings, and ensuring the best possible outcome through skilled representation and strategic advice.

Bakhtiari & Harrison Help Former Wells Fargo Financial Advisors Rebuild Their Careers

In recent years, Wells Fargo Bank has faced significant scrutiny and legal action for its role in a widespread fraudulent scheme to open unauthorized customer accounts. This scandal not only impacted countless customers but also led to the unfair termination of numerous financial advisors and bankers. At Bakhtiari & Harrison, we are dedicated to defending the rights of these professionals and helping them clear their names. In this blog, we will delve into the history of Wells Fargo’s misconduct, the repercussions faced by its employees, and how our firm has successfully assisted many in rectifying their records through FINRA expungement and securities arbitration.

The Wells Fargo Scandal: A Brief Overview

The Wells Fargo scandal, which came to light in 2016, revealed that the bank had engaged in a massive scheme to meet sales targets by opening millions of unauthorized bank and credit card accounts. This practice was driven by intense pressure from management to boost numbers, resulting in unethical and illegal behavior by many employees under duress.

Regulatory bodies, including the Consumer Financial Protection Bureau (CFPB), the Office of the Comptroller of the Currency (OCC), and various state attorneys general, took action against Wells Fargo. The bank faced substantial fines and was required to implement significant reforms to address its toxic sales culture and rectify the harm done to customers.

Wells Fargo’s Response: A Flawed Cleanup

In response to the mounting legal pressures and public outcry, Wells Fargo sought to portray itself as taking decisive action to clean up its operations. Part of this strategy involved scrutinizing the records of its employees, leading to the termination of many bankers and financial advisors for alleged past misconduct—some incidents dating back over a decade.

However, this approach was deeply flawed. Many of these terminations were conducted without due process, leaving the affected employees with tarnished reputations and significant challenges in finding new employment. The financial advisors, in particular, faced an additional hurdle: the brokerage firm linked to Wells Fargo would often file a Form U5 citing the reasons for termination, which generally mirrored the bank’s accusations without independent verification.

The Impact of Form U5 and FINRA Regulations

Form U5, or the Uniform Termination Notice for Securities Industry Registration, is a critical document in the financial industry. It must be filed by brokerage firms when a registered representative leaves their firm, detailing the reasons for their departure. A negative U5 can severely damage a financial advisor’s career prospects, making it difficult to secure new employment within the industry.

In the case of the terminated Wells Fargo employees, the U5 forms often contained damaging language that portrayed them in an unfavorable light. This was typically done without any concrete evidence, merely echoing the bank’s claims of past misconduct. As a result, many skilled and experienced financial advisors found themselves unfairly blacklisted from the industry.

Bakhtiari & Harrison: Advocates for Fairness and Due Process

At Bakhtiari & Harrison, we understand the profound impact that a wrongful termination and a negative U5 can have on a financial advisor’s career. Our firm has extensive experience in representing financial advisors and bankers who have been unjustly terminated by Wells Fargo. We are committed to ensuring that our clients receive the fair treatment and justice they deserve.

Our Approach: Comprehensive Legal Support

Review and Analysis: We begin by conducting a thorough review of the circumstances surrounding the termination and the language used in the Form U5. This includes gathering all relevant documents, statements, and evidence to build a strong case.
Securities Arbitration: We challenge the validity of the termination and the U5 filing through appropriate legal channels, including securities arbitration. This may involve arbitration through FINRA or litigation, depending on the specifics of the case. Our goal is to demonstrate that the termination was unjust and that the U5 language is inaccurate and damaging.
Expungement of U5: One of our primary objectives is to expunge the negative language from the Form U5. This process involves petitioning for a change in the U5 to reflect a voluntary departure or a neutral reason for termination, thereby restoring our client’s professional reputation.
Negotiation and Settlement: In many cases, we engage in negotiations with Wells Fargo and other involved parties to reach a fair settlement. This may include compensation for damages and an agreement to amend the U5 filing.
Support and Advocacy: Beyond the legal battle, we provide our clients with ongoing support and advocacy, helping them navigate the complexities of the financial industry and rebuild their careers.

Success Stories: Restoring Reputations and Careers

Our firm has a proven track record of successfully expunging negative U5 language and changing the termination status to voluntary for many former Wells Fargo financial advisors. Here are a few examples:

Case Study 1: A financial advisor with over 15 years of experience was terminated by Wells Fargo for alleged misconduct that occurred more than a decade earlier. The advisor was unable to find new employment due to the damaging U5 filing. We successfully demonstrated that the termination was unjust and secured an expungement of the U5, allowing our client to resume their career with a new firm.
Case Study 2: Another client, a banker-turned-financial advisor, faced termination for minor infractions that had long since been resolved. The U5 filing echoed the bank’s outdated claims, severely limiting the advisor’s job prospects. We challenged the termination through arbitration, resulting in a settlement that included amending the U5 to reflect a voluntary resignation.
Case Study 3: A young financial advisor, relatively new to the industry, was terminated by Wells Fargo for alleged compliance violations. Despite a lack of concrete evidence, the U5 filing portrayed the advisor in a negative light. Through persistent legal efforts, we were able to clear the advisor’s record, enabling them to secure a position with a reputable firm.

The Road Ahead: Your Partner in Justice

If you are a former Wells Fargo financial advisor who has been unjustly terminated and suffered from a damaging U5 filing, Bakhtiari & Harrison is here to help. We believe in fighting for fairness and ensuring that our clients receive the justice they deserve. Our experienced team of securities attorneys is dedicated to restoring your professional reputation and helping you rebuild your career.

Standing Up for What’s Right

The Wells Fargo scandal has left a trail of devastation not only for its customers but also for many of its dedicated employees. At Bakhtiari & Harrison, we are committed to standing up for financial advisors who have been wronged. With our expertise in securities arbitration and FINRA expungement, we have successfully helped many professionals clear their names and continue their careers in the financial industry.

If you or someone you know is facing similar challenges, contact us today. Let Bakhtiari & Harrison be your advocate in the fight for justice and professional redemption. Together, we can turn the page on this difficult chapter and build a brighter future.